Exhibit 10(a)
Constellation Energy Group, Inc.
Deferred Compensation Plan
For Non-Employee Directors
1. Objective. The objective of this Plan is to provide a portion of the
Compensation of non-employee Directors of CEG in the form of Stock
Units, thereby promoting a greater identity of interest between CEG's
non-employee Directors and its stockholders, and to enable such
Directors to defer receipt of the portion of their Compensation that is
payable in cash.
2. Definitions. As used herein, the following terms will have the meaning
specified below:
"Annual Retainer" means the amount payable by CEG to a Director as
annual compensation for performance of services as a Director, and
includes Committee Chair retainers. All other amounts (including without
limitation Board/committee meeting fees, and expense reimbursements)
shall be excluded in calculating the amount of the Annual Retainer.
"Board" means the Board of Directors of CEG.
"Cash Account" means an account by that name established pursuant to
Section 7. The maintenance of Cash Accounts is for bookkeeping purposes
only.
"CEG" means Constellation Energy Group, Inc., a Maryland corporation,
or its successor.
"Change in Control" means (i) the purchase or acquisition by any person,
entity or group of persons (within the meaning of section 13(d) or 14(d)
of the Securities Exchange Act of 1934 (the "Exchange Act"), or any
comparable successor provisions), of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20 percent
or more of either the outstanding shares of common stock of CEG or the
combined voting power of CEG's then outstanding shares of voting
securities entitled to a vote generally, or (ii) the consummation of,
following the approval by the stockholders of CEG of a reorganization,
merger or consolidation of CEG, in each case, with respect to which
persons who were stockholders of CEG immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter,
own more than 50 percent of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged or
consolidated entity's then outstanding securities, or (iii) a
1
liquidation or dissolution of CEG or the sale of substantially all of
its assets, or (iv) a change of more than one-half of the members of the
Board within a 90-day period for reasons other than the death,
disability, or retirement of such members.
"Committee" means the Committee on Management of the Board.
"Common Stock" means the common stock, without par value, of CEG.
"Compensation" means any Annual Retainer and meeting fees payable by CEG
to a participant in his/her capacity as a Director. Compensation
excludes expense reimbursements paid by CEG to a participant in his/her
capacity as a Director.
"Deferred Cash Compensation" means any cash Compensation that is
voluntarily deferred by a participant pursuant to Section 6.
"Director" means a member of the Board who is not an employee
of CEG or any of its subsidiaries/ affiliates.
"Disability" or "Disabled" means that the Plan Administrator has
determined that the participant is unable to fulfill his/her
responsibilities of Board membership because of illness or injury. For
purposes of this Plan, a participant's eligibility to participate shall
be deemed to have terminated on the date he/she is determined by the
Plan Administrator to be Disabled.
"Earnings" means, with respect to the Cash Account, hypothetical
interest credited to the Cash Account. "Earnings" means, with respect to
the Stock Account, hypothetical dividends credited to the Stock Account.
"Fair Market Value" means, as of any specified date, the average closing
price of a share of Common Stock, reported in "New York Stock Exchange
Composite Transactions" as published in the Eastern Edition of The Wall
Street Journal for the most recent 30 days during which Common Stock was
traded on the New York Stock Exchange (including such valuation date if
a trading date).
"Plan Accounts" means a participant's Cash Account and/or Stock Account.
The maintenance of Plan Accounts is for bookkeeping purposes only.
"Plan Administrator" means, as set forth in Section 3, the Board.
2
"Stock Account" means an account by that name established pursuant to
Section 8. The maintenance of Stock Accounts is for bookkeeping purposes
only.
"Stock Unit(s)" means the share equivalents credited to a Participant's
Stock Account pursuant to Section 8. The use of Stock Units is for
bookkeeping purposes only; the Stock Units are not actual shares of
Common Stock. CEG will not reserve or otherwise set aside any Common
Stock for or to any Stock Account.
3. Plan Administration.
(i) Plan Administrator - The Plan is administered by the Board, who has sole
authority to interpret the Plan, and, in general, to make all other
determinations advisable for the administration of the Plan to achieve
its stated objective. Decisions by the Plan Administrator shall be final
and binding upon all persons for all purposes. The Plan Administrator
shall have the power to delegate all or any part of its
non-discretionary duties to one or more designees, and to withdraw such
authority, by written designation.
(ii) Amendment - This Plan may be amended from time to time or suspended or
terminated at any time, at the written direction of the Plan
Administrator. However, amendments required to keep the Plan in
compliance with applicable laws and regulations may be made by the Vice
President - Human Resources of CEG (or other vice president succeeding
to that function) on advice of counsel. Nothing herein creates a vested
right.
(iii) Indemnification - The Plan Administrator (and its designees), Chairman
of the Board, Chief Executive Officer, President, and Vice
President-Human Resources of CEG and all other employees of CEG or its
subsidiaries/affiliates whose assigned duties include matters under the
Plan, shall be indemnified by CEG or its subsidiaries /affiliates or
from proceeds under insurance policies purchased by CEG or its
subsidiaries/affiliates, against any and all liabilities arising by
reason of any act or failure to act made in good faith pursuant to the
provisions of the Plan, including expenses reasonably incurred in the
defense of any related claim.
4. Eligibility and Participation.
(i) Mandatory participation - A Director is required to participate in this
Plan with respect to the receipt of fifty
3
percent (50%) of his/her Annual Retainer in the form of Stock Units
under Section 5 of the Plan, while so classified.
(ii) Voluntary participation - A Director is eligible to participate in the
Plan by electing to defer all or certain portions of the participant's
Compensation, that is payable in cash, under Section 6 of the Plan,
while so classified.
(iii) Termination of participation - Eligibility to participate shall
terminate on the date the participant ceases to be a Director.
Notwithstanding termination of eligibility, such person with Plan
Accounts will remain a participant of the Plan, solely for purposes of
the administration of existing Plan Accounts, and no additional Stock
Units will be granted and no further deferrals of cash Compensation
under the Plan will be permitted.
5. Mandatory Stock Units. The Stock Account of a participant will be
credited on January 1 of each calendar year with Stock Units equal to
the number of shares of Common Stock (including fractions of a share)
that could have been purchased, with fifty percent (50%) of the
participant's Annual Retainer for such calendar year, at Fair Market
Value on such January 1.
If a participant initially becomes eligible to participate in the Plan
during a calendar year, the Stock Account of the participant for such
calendar year will be credited, on the date that is the first day of the
calendar month after the participant initially becomes eligible to
participate in the Plan, with Stock Units equal to the number of shares
of Common Stock (including fractions of a share) that could have been
purchased at Fair Market Value on such date, with an amount equal to (i)
fifty percent (50%) of the participant's Annual Retainer multiplied by
(ii) a fraction the numerator of which is the number of full calendar
months in the calendar year on and after such date, and the denominator
of which is 12.
The Stock Account will be maintained pursuant to Section 8.
6. Cash Compensation Deferral Election. A participant may elect to defer
none, all or fifty percent (50%) of his/her Annual Retainer that is
payable in cash (i.e., fifty percent (50%) of the Annual Retainer)
and/or may elect to defer none, all, fifty percent (50%), or
seventy-five percent (75%) of his/her other Compensation that is payable
in cash (i.e., one hundred percent (100%) of all other Compensation). A
participant's cash Compensation deferral election with respect to the
Annual Retainer shall specify whether the deferred Annual
4
Retainer is to be credited to the Cash Account or to the Stock Account.
All other Cash Compensation that a participant elects to defer will be
credited to the Cash Account.
Such election shall be made by written notification to the Vice
President-Human Resources of CEG (or other vice president succeeding to
that function). Such election shall be made prior to the calendar year
during which the applicable cash Compensation is payable, and shall be
effective as of the first day of such calendar year. If a participant
initially becomes eligible to participate in the Plan during a calendar
year, the election for such calendar year must be made within thirty
(30) calendar days after the date the participant initially becomes
eligible to participate in the Plan, and shall be effective with respect
to Compensation earned after the date the election is received by the
Vice President-Human Resources of CEG (or other vice president
succeeding to that function). Elections under this Section shall remain
in effect for all succeeding calendar years until revoked. Elections may
be revoked by written notification to the Vice President-Human Resources
of CEG (or other vice president succeeding to that function), and shall
be effective as of the first day of the calendar year following the
calendar year during which the revocation is received by such Vice
President.
Notwithstanding anything herein contained to the contrary, the Plan
Administrator shall have the right in its sole discretion to permit a
participant to defer other percentages of his/her Annual Retainer and/or
other Compensation that is payable in cash.
7. Cash Accounts. Cash Compensation that consists of the Annual Retainer
that a participant has elected to defer into the Cash Account is
credited to the participant's Cash Account on January 1 (or if later,
the date the participant's initial election to participate in the Plan
becomes effective). All other cash Compensation that a participant has
elected to defer is credited to the participant's Cash Account on each
date such cash Compensation would otherwise have been paid to the
Director. A participant's Cash Account shall be credited with earnings
at the rate earned by the Interest Income Fund under the Constellation
Energy Group, Inc. Employee Savings Plan, and computed in the same
manner as under such plan. Earnings are credited to the Cash Account
commencing on the date the applicable Deferred Cash Compensation is
credited to the Cash Account.
5
8. Stock Accounts. Cash Compensation that consists of the Annual Retainer
that a participant has elected to defer into the Stock Account is
credited to the participant's Stock Account on January 1 (or if later,
the date the participant's initial election to participate in the Plan
becomes effective). A participant's Stock Account shall be credited with
Stock Units equal to the number of shares of Common Stock (including
fractions of a share) that could have been purchased with such Deferred
Cash Compensation, at Fair Market Value on such date. Grants of
mandatory Stock Units are credited to the Stock Account as set forth in
Section 5.
As of any dividend distribution date for the Common Stock, the
participant's Stock Account shall be credited with additional Stock
Units equal to the number of shares of Common Stock (including fractions
of a share) that could have been purchased, at the closing price of a
share of Common Stock on such date as reported in "New York Stock
Exchange Composite Transactions" as published in the Eastern Edition of
the The Wall Street Journal, with the amount which would have been paid
as dividends on that number of shares (including fractions of a share)
of Common Stock which is equal to the number of Stock Units then
credited to the participant's Stock Account.
In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, recapitalization, combination or
exchange of shares or other similar changes in the Common Stock, then
appropriate adjustments shall be made in the number of Stock Units in
each participant's Stock Account. Such adjustments shall be made
effective on the date of the change related to the Common Stock.
9. Distributions of Plan Accounts. Distributions of Plan Accounts shall be
made in cash only, from the general assets of CEG.
A participant may elect (by notification in the form and manner
established by the Vice President-Human Resources of CEG (or other vice
President succeeding to that function) from time to time) to begin
distributions (i) in the calendar year following the calendar year that
eligibility to participate terminates, (ii) in the calendar year
following the calendar year in which a participant attains age 70, if
later, or (iii) any calendar year between (i) and (ii). Such election
must be made prior to the end of the calendar year in which eligibility
to participate terminates. Alternatively, a participant who reaches age
70 while still
6
eligible to participate may elect to begin distributions, in the
calendar year following the calendar year that the participant reaches
age 70, of amounts in his/her Plan Accounts as of the end of the
calendar year the participant reaches age 70. Such election must be made
prior to the end of the calendar year in which the participant reaches
age 70, and a distribution election to receive any subsequently deferred
amounts beginning in the calendar year following the calendar year that
eligibility to participate terminates, must be made prior to the end of
the calendar year in which eligibility to participate terminates.
A participant may elect (by notification in the form and manner
established by the Vice President-Human Resources of CEG (or other vice
President succeeding to that function) from time to time) to receive
distributions in a single payment or in annual installments during a
period not to exceed fifteen years. The single payment or the first
installment payment, whichever is applicable, shall be made within the
first sixty (60) calendar days of the calendar year elected for
distribution. Subsequent installments, if any, shall be made within the
first sixty (60) calendar days of each succeeding calendar year until
the participant's Cash Account has been paid out.
In the event applicable elections are not timely made, a participant
shall receive a distribution in a single payment within the first sixty
(60) calendar days of the calendar year following the calendar year that
eligibility to participate terminates.
The value of the Stock Account, which is equal to the number of Stock
Units in the Stock Account multiplied by the Fair Market Value on the
date on which the participant's eligibility to participate terminates
(or, the date that is the last day of the calendar year during which the
participant reaches age 70, for a participant who elects to begin
distributions while still eligible to participate), is transferred to
the Cash Account on such date. Earnings are credited to the Cash Account
through the date of distribution, and amounts held for installment
payments shall continue to be credited with Earnings. The value of the
Cash Account that is payable in cash on the date of the single payment
distribution is equal to the balance in the Cash Account on the date
that is no earlier than five (5) calendar days prior to the day of such
distribution ("Distribution Valuation Date"). The amount of any cash
distribution to be made in installments from the Cash Account will be
determined by multiplying (i) the balance in such Cash Account on the
Distribution Valuation Date by (ii) a fraction, the
7
numerator of which is one and the denominator of which is the number of
installments in which distributions remain to be made (including the
current distribution).
If a participant dies or becomes Disabled, the entire unpaid balance of
his/her Plan Accounts shall be paid to the beneficiary(ies) designated
by the participant by notification in the form and manner established by
the Vice President-Human Resources of CEG (or other vice president
succeeding to that function) from time to time or, if no designation was
made, in the event of death, to the estate of the participant, and in
the event of Disability, to the participant. Payment shall be made
within sixty (60) calendar days after notice of death or Disability is
received by such Vice President, unless prior to the participant's death
or Disability, the participant elected (in the form and manner
established by the Vice President-Human Resources of CEG (or other vice
president succeeding to that function) from time to time) a delayed
and/or installment distribution option for such beneficiary(ies);
provided, however that (i) such a distribution option election shall be
effective only if the value of the participant's Plan Accounts is more
than $50,000 on the date of the participant's death or Disability; and
(ii) the final distribution must be made to such beneficiary(ies) no
later than 15 years after the participant's death or Disability. After
the end of the calendar year that a participant's eligibility to
participate terminates, a distribution option election for a particular
beneficiary is irrevocable; provided, however, that the participant may
make a distribution option election for a new beneficiary who is
initially designated after the participant's eligibility to participate
terminates, and such election is irrevocable with respect to the new
beneficiary.
The value of the Stock Account, which is equal to the number of Stock
Units in the Stock Account multiplied by the Fair Market Value on the
date of the participant's death or Disability, is transferred to the
Cash Account on such date. Earnings are credited to the Cash Account
through the date of distribution, and amounts held for installment
payments shall continue to be credited with Earnings. The value of the
Cash Account that is payable in cash on the date of the single payment
distribution is equal to the balance in the Cash Account on the date
that is no earlier than five (5) calendar days prior to the day of such
distribution ("Beneficiary Distribution Valuation Date"). The amount of
any cash distribution to be made in installments from the Cash Account
will be determined by multiplying (i) the balance in such Cash Account
on the Beneficiary Distribution Valuation Date by (ii) a fraction, the
numerator of which is one and the
8
denominator of which is the number of installments in which
distributions remain to be made (including the current distribution).
Upon the death of a participant's beneficiary for whom a delayed and/or
installment distribution option was elected, the entire unpaid balance
of the participant's Cash Account shall be paid to the beneficiary(ies)
designated by the participant's beneficiary by notification in the form
and manner established by the Vice President-Human Resources of CEG (or
other vice president succeeding to that function) from time to time or,
if no designation was made, to the estate of the participant's
beneficiary. Payment shall be made within sixty (60) calendar days after
notice of death is received by such Vice President. The value of the
Cash Account that is payable in cash is equal to the balance in the Cash
Account on the date that is no earlier than five (5) calendar days prior
to the day of such distribution.
Notwithstanding anything herein contained to the contrary, the Plan
Administrator shall have the right in its sole discretion to (i) vary
the manner and timing of distributions of a participant or beneficiary
entitled to a distribution under this Section 9, and may make such
distributions in a single payment or over a shorter or longer period of
time than that elected by a participant; and (ii) vary the period during
which the closing price of Common Stock is referenced to determine the
value of the Stock Account that is transferred to the Cash Account on
the date on which the participant's eligibility to participate
terminates. Any affected participants will not participate in exercising
such discretion.
10. Beneficiaries. A participant shall have the right to designate, change
or rescind a beneficiary(ies) who is to receive a distribution(s)
pursuant to Section 9 in the event of the death or Disability of the
participant. A participant's beneficiary(ies) for whom a delayed and/or
installment distribution option was elected shall have the right to
designate a beneficiary(ies) who is to receive a distribution pursuant
to Section 9 in the event of the death of the participant's
beneficiary(ies).
Any designation, change or recision of the designation of beneficiary
shall be made by notification in the form and manner established by the
Vice President-Human Resources of CEG (or other vice president
succeeding to that function) from time to time. The last designation of
beneficiary received by such Vice President shall be controlling over
any testamentary or purported disposition by the participant (or,
9
if applicable, the participant's beneficiary(ies)), provided that no
designation, recision or change thereof shall be effective unless
received by such Vice President prior to the death or Disability
(whichever is applicable) of the participant (or, if applicable, the
death of the participant's beneficiary(ies)).
If the designated beneficiary is the estate, or the executor or
administrator of the estate, of the participant (or, if applicable, the
participant's beneficiary(ies)), a distribution pursuant to Section 9
may be made to the person(s) or entity (including a trust) entitled
thereto under the will of the participant (or, if applicable, the
participant's beneficiary(ies)), or, in the case of intestacy, under the
laws relating to intestacy.
11. Valuation of Plan Accounts. The Plan Administrator shall cause the value
of a participant's Plan Accounts to be determined and reported to CEG
and the participant at least once per year as of the last business day
of the calendar year. The value of the Stock Account will equal the
number of Stock Units in the Stock Account multiplied by the closing
price of a share of Common Stock on the last business day of the
calendar year as reported in "New York Stock Exchange Composite
Transactions" as published in the Eastern Edition of the The Wall Street
Journal. The value of the Cash Account will equal the balance in the
Cash Account on the last business day of the calendar year.
12. Withdrawals. No withdrawals of Plan Accounts may be made, except a
participant may at any time request a hardship withdrawal from his/her
Plan Accounts if he/she has incurred an unforeseeable financial
emergency. An unforeseeable financial emergency is defined as severe
financial hardship to the participant resulting from a sudden and
unexpected illness or accident of the participant (or of his/her
dependents), loss of the participant's property due to casualty, or
other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the participant. The need to send
a child to college or the desire to purchase a home are not considered
to be unforeseeable emergencies. The circumstance that will constitute
an unforeseeable emergency will depend upon the facts of each case.
A hardship withdrawal will be permitted by the Plan Administrator only
as necessary to satisfy an immediate and heavy financial need. A
hardship withdrawal may be permitted only to the extent reasonably
necessary to satisfy the financial need. Payment may not be made to the
extent that
10
such hardship is or may be relieved (i) through reimbursement or
compensation by insurance or otherwise, (ii) by liquidation of the
participant's assets, to the extent the liquidation of such assets would
not itself cause severe financial hardship, or (iii) by cessation of
deferrals under the Plan.
The request for hardship withdrawal shall be made by notification in the
form and manner established by the Plan Administrator from time to time.
Such hardship withdrawal will be permitted only with approval of the
Plan Administrator. The participant will receive a lump sum payment
after the Plan Administrator has had reasonable time to consider and
then approve the request.
The value of the Stock Account for purposes of processing a hardship
cash withdrawal is equal to the number of Stock Units in the Stock
Account multiplied by the Fair Market Value on the date on which the
hardship withdrawal is processed. The value of the Cash Account for
purposes of processing a hardship cash withdrawal is equal to the
balance in the Cash Account on the date on which the hardship withdrawal
is processed.
13. Change in Control. The terms of this Section 13 shall immediately become
operative, without further action or consent by any person or entity,
upon a Change in Control, and once operative shall supersede and control
over any other provisions of this Plan. Upon the occurrence of a Change
in Control followed within one year of the date of such Change in
Control by the participant's cessation of Board membership for any
reason, such participant shall be paid the value of his/her Plan
Accounts in a single, lump sum cash payment. The value of the Stock
Account, which is equal to the number of Stock Units in the Stock
Account multiplied by the Fair Market Value on the date of the
participant's cessation of Board membership, is transferred to the Cash
Account on such date. Earnings are credited to the Cash Account through
the date of distribution. The value of the Cash Account that is payable
in cash on the date of the single lump sum cash payment is equal to the
balance in the Cash Account on the date that is no earlier than five (5)
calendar days prior to the day of such distribution. Such payment shall
be made as soon as practicable, but in no event later than thirty (30)
calendar days after the date of the participant's cessation of Board
membership. On or after a Change in Control, no action, including, but
not by way of limitation, the amendment, suspension or termination of
the Plan, shall be taken which would affect the rights of any
participant or the
11
operation of this Plan with respect to the balance in the participant's
Plan Accounts.
14. Withholding. CEG may withhold to the extent required by law all
applicable income and other taxes from amounts deferred or distributed
under the Plan.
15. Copies of Plan Available. Copies of the Plan and any and all amendments
thereto shall be made available to all participants during normal
business hours at the office of the Plan Administrator.
16. Miscellaneous.
(i) Inalienability of benefits - Except as may otherwise be required by
law or court order, the interest of each participant or beneficiary
under the Plan cannot be sold, pledged, assigned, alienated or
transferred in any manner or be subject to attachment or other legal
process of whatever nature; provided, however, that any applicable taxes
may be withheld from any cash benefit payment made under this Plan.
(ii) Controlling law - The Plan and its administration shall be governed
by the laws of the State of Maryland, except to the extent preempted by
federal law.
(iii) Gender and number - A masculine pronoun when used herein refers to
both men and women and words used in the singular are intended to
include the plural, and vice versa, whenever appropriate.
(iv) Titles and headings - Titles and headings to articles and sections
in the Plan are placed herein solely for convenience of reference and in
any case of conflict, the text of the Plan rather than such titles and
headings shall control.
(v) References to law - All references to specific provisions of any
federal or state law, rule or regulation shall be deemed to also include
references to any successor provisions or amendments.
(vi) Funding and expenses - Benefits under the Plan are not vested or
funded, and shall be paid out of the general assets of CEG. To the
extent that any person acquires a right to receive payments from CEG
under this Plan, such rights shall be no greater than the right of any
unsecured general creditor of CEG. The expenses of administering the
Plan will be borne by CEG.
12
(vii) Not a contract - Participation in this Plan shall not constitute a
contract of employment or Board membership between CEG and any person
and shall not be deemed to be consideration for, or a condition of,
continued employment or Board membership of any person.
(viii) Successors - In the event CEG becomes a party to a merger,
consolidation, sale of substantially all of its assets or any other
corporate reorganization in which CEG will not be the surviving
corporation or in which the holders of the common stock of CEG will
receive securities of another corporation (in any such case, the "New
Company"), then the New Company shall assume the rights and obligations
of CEG under this Plan.
13